October 09, 2024 23:55 GMT
ASIA RATES: KORIBOR Curve Inverts Further Ahead Of BoK Policy Decision
ASIA RATES
South Korean sovereign bonds have cheapened sharply in recent days ahead of tomorrow’s Bank of Korea (BoK) policy decision, primarily due to a rise in global rates following last Friday’s US non-farm payrolls data rather than a change in expectations for domestic policy.
- Although last week’s CPI data shifted consensus toward a 25bp cut tomorrow, the market has been pricing in an aggressive easing cycle for some time.
- The KORIBOR curve (1-month vs. 12-month) continues to bull-flatten to historically inverted levels, even with a cut tomorrow likely.
- At -25bps, the curve is now substantially lower than mid-2019 levels, just after the BoK began its previous easing cycle.
Chart 1: BoK Official Rate (%) vs. KORIBOR (1-mth vs. 12-mth) Curve (%)
Source: MNI – Market News / Bloomberg
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